China’s Zhongman Petroleum and Natural Gas Group (ZPEC) has announced it has won a competitive tender to explore and develop Algeria’s Zerafa II natural gas block, outbidding established Western energy giants such as TotalEnergies, Eni, and Equinor.
The announcement, shared on ZPEC’s official WeChat platform late Wednesday, marks the Shanghai-listed company’s first foray into hydrocarbon exploration in Africa.
The Zerafa II block, located in the central part of Algeria, covers over 38,600 square kilometres reaching the southern part of Algeria’s main gas-bearing Gourara-Timimoun basin.
The contract was awarded by Algeria’s National Agency for the Valorization of Hydrocarbon Resources (ALNAFT) under a production sharing agreement.
Algeria’s quest for new gas discoveries
Algeria, one of Africa’s top gas producers, is accelerating efforts to attract foreign investment in exploration and development.
The country is facing declining domestic production and growing global demand for natural gas.
In 2024, Algeria recorded the second-largest drop in LNG exports in the world largely due to extended maintenance at major gas-producing fields.
Export volumes fell by 1.44 million tonnes, totaling 11.59 million tonnes for the year.
Despite these challenges, Algeria’s state energy company Sonatrach managed to extend its gas supply deal with Slovenia through 2027, ensuring some level of stability in its export commitments.
To boost upstream activity, the Algerian government launched a five-year licensing round in 2024 targeting both oil and gas development.
“We need more exploration. Today, we have more than 240 discoveries waiting to be developed. We need to make more discoveries to increase our reserves. We are looking for companies who are strong in exploration,” Mourad Beldjehem, President of ALNAFT, said during the launch.
The results of the 2024 licensing round are expected next month.
ZPEC’s growing MENA presence
Although the final contract for the Zerafa II block has not yet been signed, the project is anticipated to unlock untapped natural gas reserves in Algeria.
Since its A-share listing on the Shanghai Stock Exchange in 2017, ZPEC has actively pursued strategic oil and gas interests across the Middle East and North Africa (MENA) region.
The company was recently awarded operator status for blocks in Libya, as per information available on its website.
The Algeria win is ZPEC’s most recent high-profile acquisition, following its successful bids to explore oil and gas assets in Iraq and Kazakhstan last year.
